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Vale rallied along with the iron ore markets, but don't get too caught up in that advance.

What: Vale S.A.'s (NYSE:VALE) stock rose over 24% last month. That hardly erases the company's nearly 90% five-year decline, but it's nice to see just the same. But don't get too caught up in one month, because there's more to understand about Vale.

So what: Vale is one of the world's largest iron ore miners. The metal represents the vast majority of the company's revenues. So when iron ore started to move higher, along with other commodities, Vale's shares staged an impressive rebound. This is pretty much what you'd expect. That said, competitors such as BHP Billiton(NYSE:BHP) didn't rally to the same degree, with shares going up only 4% or so last month.

Why did Vale rebound so much more? For starters, BHP is more diversified, so it isn't as keyed in to iron ore. Second, BHP is in better financial shape. Vale is, for lack of a better term, in survival mode, selling assets and deeply cutting costs so it can keep spending on big projects that are too far along to stop.

That's a key reason Vale rallied so much. Its SD11 mine, which is nearing completion, is an important asset for the miner. It's the biggest iron ore project in the company's history. Although it's expected to be low on the cost curve once it's producing, bringing more iron ore to market when prices are weak isn't exactly a great thing. If iron ore prices keep moving higher, however, SD11 and other projects start to look like increasingly better investments.

That said, another positive for Vale came with its Feb. 25 earnings release, which showed that things are bad, but perhaps not as bad as some investors had feared. That certainly helped assuage the concerns of investors who were expecting the worst.

Now what: It's nice to see a stock rally. And when you watch a company outdistancing its peers on the upside, it's sure to draw attention. But you have to look deeper before you jump aboard. In Vale's case, a big issue to watch is the pipeline of new production coming on at what is a less than desirable time. That, of course, has to be juxtaposed against the company's efforts to keep funding development when its sales and financial results have plummeted. Rising iron ore prices help a lot, but it isn't the only issue to watch.

That brings up an additional wrinkle here: the Samarco mine disaster. This is a 50/50 joint venture between Vale and BHP, where mine waste broke through a containment dam and flooded local towns, taking lives. There's still a huge amount of uncertainty around the final bill for that event, though a settlement with the Brazilian government in early March appears to have provided at least a little more clarity. But this is a big issue that's likely to linger for years. Once again, however, because Vale is in a more precarious position than BHP, it rallied more than its partner on the news.

That, however, doesn't make it a better investment. If you decide to invest in Vale, make sure you understand what you own. More conservative types looking for a way to play iron ore might be better off with BHP.